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Supermarket Chain Delhaize Forces Franchisers To Sell Food Products Below Cost
The latest inflation fighting strategy in a world that has now completely forgotten the threat of "disinflation", and instead is relishing 30 year highs in sugar and 150 year highs in cotton, comes from Belgium where supermarket chain Delhaize has been exposed as coercing 120 franchisers to sell products at a loss. As a result, said franchisers, formerly on very good terms with the supermarket operator, have organized themselves into an interest group with its own steering committee to make their grievances heard. And while the outcome of this escalation will certainly not be pleasant for any of the parties involved, one thing is certain: prices at both Delhaize supermarkets, and Belgian competitors who follow suit, are about to surge as retailers have no choice but to seek avoiding bankruptcy through reindexing prices. Which makes us wonder just how many supermarket stores and grocery retailer in the US use comparable tactics? But have no fear: according to the CPI, food inflation in December at 0.1% was the lowest it has been in five months. And with nobody having the guts to tell Bernanke that the food emperor is completely naked, we are 100% confident that everyone in America will be able to afford the 0.1% increase in food prices.
More details form Retail Detail, Google translated:
Delhaize Over 120 disgruntled franchisees have formed an association to Delhaize together to express their grievances dramatic drop in gross margins. According to independent supermarket owners, they are from the central even forced to sell certain products below cost. Is simply not true, however, respond Delhaize. It came VTM journalist Patrick Van Gompel heard that franchise stores by Delhaize Group are required to sell products at a loss . Partly for that reason decided to self-AD Delhaize supermarket operators last fall that it was time to organize themselves into an interest group. The founders believed that the network of Delhaize affiliates so extensive that it was high time to group them.
The association also calls on all partners Delhaize Delhaize franchisees also to join the grouping. Even if it only temporarily to Dutch franchisees.
Some involved weekly managers inform retail detail dozens of products with a negative margin to be sold. This week would be an estimated one to twenty products.
The way the margin reductions are imposed from above, both through content and through adjustments to price changes. If content changes are weighing changes with product packaging such bigger or smaller quantities at the same price offered at lower prices.
In one sample came to the observations that some drinks this week striking yield low margins. This week, the margin of Delhaize supermarket owners on a bottle of Johnny Walker whiskey brand from a mere 1.84%. Duvel on a tank, the entrepreneurs then a 3% margin, while a Jupiler cook a margin of 0.4% is bad.
More generally, margins of independent Delhaize supermarket managers under severe pressure. Chris Opdebeeck showed in its annual study of the mass distribution itself, that the margins of franchise owners between 2007 and 2008 have fallen significantly. By the price action of the supermarket chains are the profit margins of the supermarket owners under heavy pressure.
According to the supermarket owners, the entire margin in ten years time 10%. This while the margin to be abandoned, for participation in transportation costs such as publicity and participation, in the same period rose 5%. The loss amounted to gross margin throughout the past ten years a total of 5%. In other words, 5% less income.
And if franchisers are hurting, with their limited cost exposure, one can imagine how much pain the independents must be in:
One might wonder why only the franchisees face these problems. After all, everybody struggles with pressure on gross margins due to rising costs and a negative pricing environment? Independent supermarket owners are black sheep in the current distribution landscape since they have no way at the low cost infrastructure of other great players can. Their cost structure is simply much higher.
Competitor eminently Colruyt Benefit already lower fixed costs. Colruyt example, plays no music in stores, making it Sabam not have to pay, and did not even have to paint parking stripes. All costs are really reduced to a minimum. Paradoxically, this rudimentary equipment Colruyt's image as the cheapest only benefit.
The threat of an imminent price war is the catalyst that made everyone realize that losing money is not a workable business model:
The problem of declining margins is not new. Pressure on food prices despite soaring commodity prices and operating costs over many years ensure that pressure is on the gross margin of supermarket owners. Especially the last five years it is becoming worse. The reason the bomb just now beginning to crack , however, is simple.
The arrival of Albert Heijn supermarket operators entails the wits. What if Albert Heijn truly unleashes a price war? What if Albert Heijn is frontally compared Colruyt place? Colruyt can not afford their claim to be the cheapest failing to meet ...
Albert Heijn manages his usual low prices by pushing on the Belgian market, the local supermarkets the biggest victims. Not only the plant will bleed, the local entrepreneur. And playing with his family.
If their income now so on the slope, what will they still remains? The franchisees of AD Delhaize may not have dreamed.
It's a good thing that Belgians are so much better at having a stable and democratic government than their Egyptian peers or else someone could say that buying the Belgian CDS dip could be the best thing to happen to nominal prices since Ben Bernanke discovered the toner cartridge.
h/t Jonas
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Negative margins bitches!
What is predictable is that in countries where more than 85% of the population spends 85% of their income on food will explode first. The US will be the last one standing. But......revolution will not be avoided.
Act accordingly.
Beans, bullets, and band-aids. Bitches!!!
Beans, bullets, and band-aids. Bitches!!! ... and bullion ...
maybe our fat ass citizens will loose a little weight eating beans, including me. oh we can all stuff hoses up our asses and burn the gas for heat in the winter time
There is no way this is possible. Bernanke assured Scott Pelley on '60 Minutes' that he will stop inflation within 15 minutes at its first sighting. He pinky swore. I trust in Ben Bernanke. He is Amerika's great Keynesian hope.
The war mongers on TV will tell you to fear Muslim ideology and Israel is in danger. I'm getting sick and tired of this BULLSHIT!
Let me set you strait right now on that issue.
NO COUNTRY IS GOING TO INVADE AND DESTROY ISRAEL EVER UNLESS THEY WANT A COUPLE DOZEN NUKES SHOVED UP THEIR ASS.
ISRAEL HAS 300+ NUKES OF THEIR OWN AND WILL USE THEM IF THEY NEED TO. STOP FEELING SORRY FOR ISRAEL AND STOP SENDING THEM US FOREIGN AID NOW.
Yes, they've gotten a lot of mileage by playing the victim! And, they stole the nuke technology from us but we must forgive them for they know not what they do! Seriously, the Israelis only want one thing, the land next to that which they already own.
Egyptians should make lots of signs and get them on TV that say;
ISRAEL HAS 300+ NUKES! DON’T FEEL SORRY FOR THEM!
Ok, Ok, Ok. Israel has nukes. How many fucking threads are you gonna post the exact same off topic comments in?
Till I see and hear it on TV.
The Arab world has been shouting for the last 40 years that the only way to end the tension in the Middle East is for Israel to leave the illegally occupied territories and revert to the pre 1967 borders. That's it. Anyone stating anything to the contrary is not looking for peace or truth, they are ideologues looking for excuses to justify outrageous military spending. As a Jew, i'm ashamed of the illegal and racist regime known as Israel.
Brave man.
My understanding is that there is a significant part of the population of Israel that dislikes the current policies of Israel. Somehow these voices are not heard; they certainly are not reflected in western media in which a neo-con right wing view dominates with no indication of any counter currents at all.
Be aware of the American MSM brainwashing tactic, and conditioning you TO REPEAT WHAT THEY ARE SAYING WHEN OUR TIME COMES.
On every channel they are repeating over and over again;
WHERE IS THE MILITARY? WHERE ARE THE POLICE? WHY DON'T THEY STEP IN TO BREAK UP THE PROTESTS?
THIS IS SURELY A SOCIAL ENGINEERING TACTIC THEY ARE USING ON YOU. All the networks are doing it to you.
Feels much cheaper to eat well in Europe, than it did when I lived in the USA some years back. We grow much food locally here, and our quality standards are quite higher.
And speaking of quality food, Delhaize among their house brands here in Belgium, has some quite favoured and drinkable Bordeaux for only €2,39 per full bottle! ... Hope that was not among the 'forced below cost' items which will now be re-priced.
Hahaha
..price controls..
We are on our way to never ever land.
Lose money on every sale, but make it up on volume.
Hell yeah !!
Oh, wait ....
no, no, no...it's velocity. You sell the stuff so fast, it goes back in time, and negative margins become positive.
Or something like that.
Costco is way up, up 10% to 20% in 6 months. At least in Hawaii.
Oh dear, I hope the Belgium government does something to stop this.
Yup that makes sense. It always works to have the government make a whole bunch of new rules, in backroom deals with certain interest groups. Then the government forces those rules onto unwilling parties by force. And this will "fix" everything?
Folks, nothing is going to get better--it will get worse--so long as this mentality persists!
Selling below cost is against the law in most countries as it can be used to bankrupt the weaker competitors.
There is no government in Belgium ;)
http://www.pri.org/politics-society/government/belgium-remains-without-a-government2581.html
Lucky fuckers.
lolololol
We pay to be raped, they still pay for nothing. You didn't think they'd stop tax collections during gov't stoppage, did ya?
So they got 30,000 idiots in belgium who want to form a government?
No need. The 'free' market will decline, a black market will grow, and the store shelves will be empty in no time at all.
Smart ass. Belgium doesn't have a government. :D
Burger King was doing the same thing with the $1 double cheeseburger till franchises threatened to sue. Now the $1 double only has one slice of cheese.
Ummm... That's not cheese, its a cheesy-food-type-product, sort-of...
Put it this way, if the burger were put in a 100 year time capsule, the only thing that would survive would be that piece of "cheese". They use the same material in liquid form on those ballpark nachos.
BK rocks! You can even use the cheese as caulking to seal up your windows, around tubs and sinks.
Don't get caulkey
miserable margin...
Delhaize is just trying to do what Wal-Mart does. If it works for Wal-Mart it should work for anybody, right?
Michelle Obama is already forcing Walmart to sell veggies and healthy food below cost lest they face strict government oversight and health regulations.
How does that "forcing" thing work? Got a link to the legal or coercive tactics she is using, and how she got legislative power? Thanks in advance for your thoughtful reply.
I never heard of this either, would not be like forcing people to buy health insurance or anything.
You got union problems, I can take care of them for ya...
Obama and Walmart and of course Janet "the man" Napolitano have an accommodation of sorts. They don't shove unions down Walmarts throat and Walmart uses their reach into trailer park America and does the "health experts" bidding.
How do you think the worlds newest health expert; Mrs. Obama got Walmart to play ball? A thoughtful explanation would be appreciated
Yay, Hannaford!
Do the Belgians have a government? ;)
No we don't :) But that's a good thing right? ;).
Food for thought: In Egypt, Tunesia,... people are getting on the streets to throw off government, but in here in Belgium, people gathered for the exact opposite reason!
http://www.guardian.co.uk/world/2011/jan/23/brussels-protests-belgium-go...
If you want a little grasp of how complicated governmental things here really are:
http://www.youtube.com/watch?v=QlwHotpl9DA
Can't they just make up the loss by buying their own stock? Uncle Benny says so...
The United States Grocery and Food prices have gone up so much that the official CPI for whatever purpose is null and void full of bull.
I have a shelf with 6 coffee cans on it. I buy when I see em on sale. By the end of the year I expect to have 24 on that shelf ready to go when a can of coffee raises retail from 13.50 to 40.00 can.
problem with that is good coffee...freshly roasted...only really lasts a couple weeks before it isn't so good any more.
Look it can be chicory and ground up asphalt as long as it has caffeine, I' m addicted and my name is John.... Hi John, donuts are in the back..
How to maximize the smaller, more expensive roll of toilet paper.
Sheryl Crow One Tissue Wiping Training Film
Sorry, couldn't resist.
"Are you strong enough to be my fan...?"
I started reading this and thought I was losing my mind for a second, choppy, it just didn’t read right then I looked back –‘Google translated:’
“The reason the bomb just now beginning to crack , however, is simple…”
It’s happening again. Simple to whom? Must be Google psy-op.(HeHeHe)
Yes, I was wondering myself what language it had been translated into. Wonder how it would do with Shakespeare or the Bible.
My favorite food group bacon has seen a 25% increase in the last 4 months...it's depressing.
Don't know what products it is about, but I'm enjoying my cheap multivitamine fruit juice at the moment, bought this afternoon at Delhaize :) Thank you Delhaize! ...?
I have enough balls to tell Bernanke he's naked. Anyone have a phone number/e-mail?
Why don't you ask del?
http://www.federalreserve.gov/feedback.cfm
My Grandparents are pissed that there was no SS increase since The Bernank kept the Bogus CPI at near zero while thier food, medical expenses, transportation, etc rose about 18%.
Make sure you foward your grievences to Obama. He will give you the change you can believe in.
Pre 1966 dimes would be fine with me.
If you're dime says 1965, it's probably not silver.
http://forum.treasurenet.com/index.php?topic=174818.0
You mean "pre-1965".
Sitting on his lazy ass watching hoop and smoking crack...you are right, that is change.
Rumors in Chicago are that he also enjoys receiving fellatio from older white men.
http://www.topix.com/forum/city/jamestown-tn/TJNP6E0VBHJ9VTEP4
People on SS are supposed to replace expensive food with cheaper alternates... like dirt or bits of cardboard
UN warns food prices could rise 40% in the next decade
http://nakedempire.wordpress.com/
That is mostly due to AAPLs?
dupe. It' s the booze, you know.
Mmmm...APPL cider
Do the Belgians have a government? ;)
Its good to see the Belgium people see the results of the high priest's handwork.
Fire the translator!!! My head hurts . . .
It's going to be interesting to see how long discounter Walmart can keep up the low prices in the face of this. Once you take away the low prices, what are you left with?
Desiel fuel at 250 gallons a fillup times 14.00 a gallon.
That will stop walmart faster than anything.
Ben bernakes new title should be Chairman of Food Riots Corp.
-
Fear not! The new EPA regulations on spilled milk, err, "oil," for farmers and ranchers is about to start being enforced.
http://online.wsj.com/article/SB1000142405274870469800457610404064757305...
I can't see this impacting food prices in any possible way. nope.
Oh, shit, I've just spilled some milk accidentally. Someone, gimme a hazmat suit and send a CDC-team pronto!
Just don't cry. Don't you dare cry fucker. Hold it back.
If you spilled it outside on the ground, you better get a backhoe and a dump trunk and find a landfill that will take toxic waste, and start digging.
I thought for sure you must have mistaken a story from The Onion for actual news. I can't believe that is legitimate. Just more proof that elections barely matter anymore. Even if Jesus ran the White House the unelected bureaucrats would still regulate us into oblivion.
Hmm. Do you think this will help prevent smaller competitors from entering the market? Even if there is an exemption for the smaller producers, what happens when they begin nearing the limit? Slow down production, or face the added regulations.
EPA = ICC.
Forgive them Uncle Milty, they know not......ah fuck it. They know exactly what they are doing.
It's too late to work within the system, and too soon to shoot the bastards.
- Claire Wolfe
The main chains around us here in the South Bend, IN area are a private one, Martin's and Kroger. Martin's prices have been relatively stable but Kroger has been raising prices noticeably for awhile now, including their store brands.
Here are the net profit margins for some chains I looked up: SuperValu Inc comprised of Acme and other chains: -3.96%; Safeway: -3.12% ; Winn-Dixie: 0%; Kroger: 1.36%; Costco: 1.73%; Whole Foods: 2.73% and Walmart: 3.73%. A&P with its other chains filed for bankruptcy in December. Kroger's and Costco's margins aren't fantastic but profit is still profit. The first three though, ick. Looks like it's already time to start cutting fat and/or raising prices.
Acme, A.K.A. Albertson's is doing poorly. They just closed one near me that has only been open a few years. Shop-Rite put them out of business. Shop-Rite is an interesting business model, by today's standard. They are a co-op of private retailers that are supplied by the parent corporation, Wakefern. The individual owners have the freedom to adjust their stores to meet the needs of the surrounding community. In fact, one is owned by a medium sized produce grower, with farms in S. Jersey and Florida. They are able to sell the produce they grow, in their Shop-Rite.
it's all bullshit !
food salesprices in Belgium are made by the german discounter Aldi. Delhaize always has been an expensive luxury store.
THE REAL QUESTION IS:
HOW DO YOU CALCULATE THE INDEX WHEN RETAILERS ARE SELLING WITH A LOSS THESE LAST FEW MONTHS?!!
In Belgium inflation index was 2.78% on jan. 1
BUT HOW DO YOU COMPARE IT IN A HONEST WAY?!
http://www.cnbc.com/id/41400249
And then this moron who downplays inflations. Trichet.... More Like Trichér